Competition Commission of India (CCI) has reportedly found that food delivery platforms Zomato and Swiggy violated competition laws, according to a report by Reuters.
The investigation, which began in 2022 after a complaint by the National Restaurant Association of India (NRAI), revealed that the companies engaged in anti-competitive practices favoring select restaurant partners.
Here Are The Key Findings
Exclusivity Agreements
Zomato allegedly offered lower commissions to restaurants that signed exclusivity agreements, while Swiggy promised business growth to restaurants that exclusively listed on its platform.
Price Parity
Both platforms reportedly required restaurants to maintain price parity, preventing them from offering lower prices on other platforms. This practice reduced competition in the market.
Impact on Market
The CCI found that these exclusivity and pricing practices hindered market competition, potentially harming smaller restaurants and consumers.
The CCI’s investigation documents, which are confidential, were shared with Zomato, Swiggy, and the NRAI in March 2024. A final decision, which could include penalties and corrective measures, is still pending. This development comes at a sensitive time for Swiggy, which is closing bids for its $1.4 billion IPO, the second-largest in India this year. The CCI case is also listed as an internal risk in Swiggy’s IPO prospectus.
Zomato’s shares fell by 3% following the news, highlighting investor concerns over potential regulatory actions. Both companies have the option to contest the findings with the CCI before a final ruling is made.
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